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Internet tax war rages in US senate

Web access costs could rise by 30 percent

US senators offered resistance to a proposed extension to the ban on internet taxes during a hearing yesterday.

There is currently a formal ban on taxes levied on internet access. This moratorium on internet taxes expires on 1 November. Representatives of Verizon Communications and the National Taxpayer Union Foundation called on Congress to make the tax ban permanent, but several senators said the current ban could allow internet service providers to package other products with internet access and exempt them from taxes.

The current ban should be extended temporarily, if at all, said Senator Daniel Inouye, a Hawaii Democrat and chairman of the Senate Commerce, Science and Transportation Committee. On Tuesday, three groups representing state government officials called for a more limited, temporary ban.

Several other senators said they would support a temporary ban on internet access taxes, but only if language in the moratorium is changed to make clear that states are allowed to tax services packaged with access, including music and movies and television over IP (or IPTV). When the moratorium was last debated in Congress in 2004, a group of senators, many of whom are former state government officials, raised concerns that the internet tax ban could cost states billions of dollars.

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